The US has 34 million small businesses, employing about half the country's workers and generating roughly half of its GDP. As a key voting block, their economic mood heading into November's midterm elections is significant. Overall economic sentiment for Donald Trump is poor, but small businesses appear fairly confident, according to several recent surveys.
Confidence is generally stable
The National Federation of Independent Businesses reported that its Small Business Optimism Index fell to just below its long-term average, while uncertainty rose slightly. Labor quality was the top concern for 26% of owners and inflation for 20%. Expansion plans weakened, though 17% still plan to add jobs in the next three months.
However, small-business confidence improved significantly in the third quarter, according to the Justworks/US Chamber Small Business Index. Some 72% of the 750 small businesses surveyed say they are comfortable with their current cash flow, but only 27% believe the US economy is in good health. Inflation remains the biggest problem, cited by 54% of owners.
Hiring is not strong, but not weak either
HR platform Gusto estimated that small businesses added 28,000 jobs in September, marking the eighth consecutive month of employment gains following a decline in January. Hiring accelerated from August's revised gain of 18,500 jobs, with growth broad across industries, regions and company sizes, and healthcare and social assistance among the strongest sectors.
Paychex, another large HR and payroll processing service, said hiring in September essentially matched its 2026 year-to-date average, with overall employment among companies with fewer than 50 employees appearing "stable". ADP reported that US private employers added 90,000 jobs in September, with hiring accelerating for the first time since May. Establishments employing one to 19 workers added 18,000 jobs.
Intuit's QuickBooks Small Business Index, however, found that employment at businesses with one to nine employees fell by 7,000 jobs in September, with declines across most sectors and regions.
Revenues remain solid
Intuit's data shows inflation-adjusted average monthly revenue increased 1.68%, with growth in 11 of 12 industries, every region and 19 of 20 states. Fiserv, a payment-processing service, reported improving sales among small businesses in September, though consumer behavior remains selective and traffic has been weaker even as customers spend more.
Economic growth continued in the third quarter
US manufacturing remained in expansion territory in September, with the Institute for Supply Management's Manufacturing Purchasing Manager's Index marking its ninth consecutive month of growth. The service sector saw its 27th consecutive month of expansion. The Wall Street Journal reported that first-quarter annualized growth was revised to 2.5% from 2.1%, and second-quarter growth was increased to 2.2% from 1.5%.
Philadelphia lags in business creation, with fewer small businesses per capita than other large cities. A Pew Research study found that Black-, Hispanic- and female-owned small businesses increased 39% between 2012 and 2022, but barriers including access to capital, regulatory requirements, taxes and commercial space continued to restrain business formation.
The economy is resilient and the overall mood of the country's small businesses is generally optimistic, despite the many challenges they face. But whether that will overcome the president's low approval ratings remains to be seen.
